Chapter 5. Challenges specific to the Banking Inquiry

5.1

The Banking Inquiry faced a number of very particular challenges, which are unlikely to be replicated for a future inquiry.

“First inquiry”

5.2

The Referendum defeat sent the Government back to the drawing board in November 2011, and it took almost 18 months for the inquiries legislation to be published. Even allowing for this, it took a further 10 months to establish the inquiry once the statutory framework was in place, in comparison to the 15 months remaining in the lifetime of the Dail when the Joint Committee received its Part 2 powers from the Dail and Seanad at the end of November 2014.

5.3

The steps over that 10 month period included the establishment of the Joint Committee, the appointment of members, the preparation of the Relevant Proposal, evaluation and reporting (separately) by the Committees on Procedure and Privileges of the Dáil and the Seanad, and decisions of the Houses.

5.4

In the course of preparing for public hearings, the Joint Committee identified a requirement for additional procedural rules (“Standing Orders”) to provide for:

removal of Joint Committee Members who are absent for witness evidence, unless such absence is due to exceptional circumstances21, and

discharge from the Joint Committee of a Member for contravening a direction of the Chairman to cease questioning or for contravening the 2013 Act22.

Both Houses adopted the Standing Orders at the request of the Joint Committee and they are now in place for future inquiries.

5.5

The fact that the Banking Inquiry was the first inquiry under the 2013 Act meant that the framework and processes of the Inquiry had to be designed and created alongside the establishment and running of the Inquiry. The Joint Committee agreed and piloted a large number of processes and protocols in the form of the “Nexus Operating Model”, to run the many activities specifically or implicitly required by the Act. These covered for example –

Witness selection and management

Evidence strategy and publication

Public hearings management

Information management and security

Consultation on the draft report.

5.6

The Operating Model, developed in close consultation with the Joint Committee’s legal team, was reviewed and added to by the Joint Committee at least monthly, as the inquiry progressed. As such it was a critical supporting element in making the inquiry work within the limited time available and in ensuring that fair procedures requirements were embedded in the Joint Committee’s working practices. For example, appropriate notice to witnesses being called to give evidence, giving witnesses an opportunity to make submissions, notifying persons named in witness statements and/or public hearings, and consulting persons affected by draft reports23. This strategy proved to be successful in mitigating the risk of legal challenge.

5.7

Nevertheless, due to the less than optimum timescale for the inquiry and the pressure for early public hearings, there was limited time for scoping of the inquiry, and all of the inquiry phases had to be conducted on a parallel basis. This had a number of practical implications, for example –

Directions for written documents had to issue very quickly. As can be seen from Appendix 6, the Joint Committee sought a very wide range of documents by direction, and up to half a million pages were provided in response. The documents published with this report (in Volume 3) are those which were considered relevant to public hearings, and/or relied on as evidence. A preliminary “sifting” process (in advance of formal directions) by way of initial scoping witness statements or by way of site visits to examine files in situ (or both) might have been more effective, however the time was not available to the team to take this approach.

With its tight time-frame, the schedule did not allow the Joint Committee to test contradictions by recalling witnesses for oral evidence. Instead this was done by using written statements on a voluntary basis to inquire into material clarifications following the completion of public hearings.

5.8

An optimum inquiry requires:

Adequate time for all phases

Appropriate sequencing of phases

Appropriate/minimal overlapping of phases

Figure 5.1: Part 2 Inquiry: Optimum timing and sequencing of phases

Months

1-3

4-6

7-9

10-12

13-15

16-18

19-21

22-24

Scoping of work based on terms of reference

Preliminary Investigation

Public hearings and review

Report and consultation

5.9

The Joint Committee recommends that the optimum timescale for a parliamentary inquiry into any matter of significant public interest is 24 months, dating from the time the Relevant Proposal is agreed by the Houses. The Banking Inquiry had 14 months.

Professional secrecy obligations under section 33AK of the Central Bank Act 1942

5.10

Section 33AK of the Central Bank Act 1942 (as amended) (“section 33AK”) prohibits listed categories of persons within the Central Bank from disclosing certain confidential information. During the preparation of the relevant proposal in July-August 2014, the Joint Committee’s advisory group alerted the Joint Committee to the fact that section 33AK would create a significant impediment to the work of the inquiry. This was the first time the impact of this section had been drawn to the Joint Committee’s attention: it was not specifically identified in the pre-legislative scrutiny process conducted by the Joint Committee on Finance, Public Expenditure and Reform on the 2013 Act. Nor does it appear to have been flagged in the speeches or debates in the Houses on the establishment of the Banking Inquiry.

5.11

In its Relevant Proposal, the Joint Committee requested an amendment to section 33AK of the 1942 Act to provide a specific “gateway” to allow Central Bank documentation to be legally provided to the Banking Inquiry. The amending Act, which was passed by the Houses in February 2015, did not become operational until the Houses agreed to put sanctions in place for Members of the Joint Committee who disclosed section 33AK information in the course of parliamentary proceedings (including Joint Committee proceedings).

5.12

Even though the amending legislation was fast-tracked as far as possible, the Central Bank could not legally provide the material directed until the amending Bill was enacted and the required Standing Orders were in place24. This delayed the receipt of Central Bank documentation in comparison to other institutions, although the Joint Committee would like to acknowledge the co-operation of the Central Bank in working to provide material as quickly as possible once the statutory gateway was operational.

5.13

With the gateway mechanism in place, the Joint Committee was enabled to access key Central Bank material for the first time and to use it in questioning witnesses in public hearings and in its final report.

5.14

The use of the information by the Joint Committee was however subject to certain restrictions and conditions, the primary one being that the Joint Committee could only legally use the information in summary or aggregate form25. Specifically –

the Joint Committee was not permitted to reference a specific document or piece of information but was able to use the information to identify themes and to reference in a general sense. This condition created additional workload for the inquiry team who had to prepare summary narratives of the many documents which were covered by section 33AK.

the Joint Committee was not legally permitted to publish any of the documents, during or after the Inquiry, as professional secrecy still applies.

5.15

The Joint Committee recommends that any statutory or other impediments to compelling documents should be identified and addressed at an early stage for future inquiries.

Criminal Proceedings and Investigations

5.16

The Joint Committee was prohibited from compelling evidence if the evidence could, if given to the Joint Committee, reasonably be expected to prejudice any criminal proceedings pending or in progress in the State or any criminal investigations being conducted in the State26.

5.17

Criminal investigations and proceedings relating to certain banking institutions and witnesses ran in parallel with the inquiry process. This had an impact on the ability of the Joint Committee to publish some documents and witness statements in fully un-redacted form, and also to hear certain witnesses in public hearings. Ongoing criminal proceedings also had to be taken into account by the Joint Committee in questioning witnesses and in preparing its final report.

5.18

The Act contains a number of provisions for formal DPP intervention to prevent prejudice to criminal trials. For example, there is a formal process for DPP input to draft reports27. While formal engagement is clearly necessary, it should be a last, or at least a late, resort. The Joint Committee is of the view that there would be considerable benefit in agreeing a protocol for informal engagement between the Office of the DPP and Parliamentary Inquiries as a complement to the formal processes under the Act.

5.19

The Joint Committee, through its legal team, did liaise informally on an ongoing basis with the Office of the Director of Public Prosecutions (DPP) throughout the inquiry. The DPP was provided with copies of all Notices of Intention to direct documents or witness evidence, along with the directions themselves, and copies of all witness statements. The Office of the DPP agreed to act as a single point of contact for the Joint Committee and to coordinate on behalf of related offices, namely the Office of the Director of Corporate Enforcement and the Garda Bureau of Fraud Investigation, and this decision is welcomed by the Joint Committee.

5.20

On the formal advice of the DPP, the Joint Committee ultimately had to withdraw its directions to certain witnesses to give evidence, on the grounds that this would prejudice criminal proceedings or investigations. The Joint Committee also decided not to publish certain witness statements on the same grounds.

5.21

The Joint Committee has absolute respect for the role of the DPP and the separation of legal and parliamentary processes. The Joint Committee also acknowledges that criminal trials should always take precedence in importance over parliamentary inquiries which cannot make findings of individual culpability, either criminal or civil.

5.22

However the Joint Committee encountered difficulty in making an informed assessment of the potential risk of prejudice posed by the publication of certain witness statements in the absence of detailed feedback from the DPP. The Joint Committee had to conduct a blind risk analysis in these cases and had to be more conservative than it would have liked as a result of this.

5.23

The Joint Committee also takes the view that the minimum 14 day period required to be allowed under the Act for the DPP to give a declaration (that evidence or documents directed by the Joint Committee could reasonably be expected to prejudice criminal proceedings or investigations) is unduly lengthy and that a more reasonable minimum period could be provided for.

5.24

The Joint Committee recommends that there should be a requirement for the DPP to prepare general guidelines for Inquiry Committees on avoiding prejudice to criminal trials and investigations.

5.25

The Joint Committee recommends the agreement of a protocol for engagement between the DPP and the Oireachtas to manage the risk of prejudice arising in criminal trials while also respecting the separate role of the Oireachtas to conduct inquiries. This could include a provision for imparting certain information to the Committee Chairman only on a confidential basis, on the basis of which the Chairman would bring a recommendation to the Committee.

5.26

The Joint Committee recommends that section 72(2) of the 2013 Act be amended to reduce the minimum fourteen day period for the DPP to furnish a declaration to a more reasonable minimum.

Following receipt of a report from a member of staff containing a number of allegations on the operation of the investigation team, the Acting Clerk of the Dáil commissioned an independent review by Mr. Senan Allen SC on 22 July 2015. The Report concluded that there was no substance whatsoever in any of the allegations and that being so, no question arose of any recommendation on further action. The Report was published in full on the Oireachtas website with personal details redacted.

5.28

Mr. Allen’s review was entirely separate from the Joint Committee. Members were however briefed by the Acting Clerk of the Dáil on both the establishment and the outcome of Mr. Allen’s review, given its relationship to the work of the Joint Committee and impact on the investigation team while the investigation was ongoing.

5.29

The Joint Committee notes the impact which the unfounded allegations had on the workings of the Joint Committee and all staff thereof and highlights in particular the complexities and difficulties arising from maintaining the work of a parliamentary inquiry along with the investigation of allegations against its staff members simultaneously.

5.30

Mindful of the provisions of the Protected Disclosures Act 2014, the Joint Committee recommends that the Committees on Procedure and Privileges (CPPs) of both Houses of the Oireachtas should urgently consider the issue of how members of both Houses deal with allegations brought to their attention.

5.31

The Committee further recommends that the CPPs should issue guidance in relation to the best practice for dealing with any such disclosures to ensure an appropriate balance between the right of access to a public representative and the right of those subjected to allegations to be fairly treated.

Risk of dissolution of the Dáil before completion of the Inquiry

5.32

By law, the current Dáil must be dissolved by early March 2016. Any Part 2 inquiry Committee which is ongoing at the dissolution of the Dáil automatically dissolves with the Dáil and cannot report subsequently.

5.33

As part of initial planning, the Joint Committee considered the feasibility of publishing interim reports at key points in the process, for example, following the context phase. Ultimately the Joint Committee did not consider it feasible to publish interim reports given the requirement to consult affected parties under the Act prior to publication of such reports28, and the already challenging timescale in which to conduct the initial investigation, hold public hearings and prepare a final report.

5.34

The Joint Committee recommends that the 2013 Act should be reviewed and amended with a view to –

including appropriate transitional provisions to mitigate the impact of Dáil dissolution on the work of inquiries, and

improving the workability of the interim reporting provisions, in particular the potential to lighten the consultation process for interim reports.

Reporting date

5.35

The original reporting date of 30 November 2015 was an extremely challenging timescale given the scope and subject matter proposed for the inquiry. At its meetings on 30 July and 8 September, the Joint Committee considered, in detail, the process for closing its evidence and the schedule for drafting, consideration and publication of the final report. As a result of this consideration, the Joint Committee agreed to request an extension to its reporting date to not later than 28 January 2016. The Houses agreed the extension motions on 6 October 2015.

Conclusion

5.36

In summary, the Banking Inquiry faced a number of very specific challenges as a result of –

the time taken to establish the inquiry as a Part 2 Inquiry, allowing only 14-15 months to conduct the inquiry,

being the first inquiry conducted under the 2013 Act and under Abbeylara principles, meaning that all processes and protocols had to be more or less created from scratch,

limitations on the use of a large volume of documentation as a result of section 33AK,

running in parallel with related criminal trials, and

the investigation into the operation of the investigation team arising from allegations which were found, on foot of the investigation, to be without any substance.

5.37

When these very specific challenges are added to –

the wide scope of the terms of reference and the 20 year time period covered,

the size of the Joint Committee,

the number of institutional participants and the volume of documentation, and

the number of public hearing witnesses,

the Joint Committee had the ingredients for a very challenging project, the scale of which was unprecedented in the context of the relatively limited experience to date of Oireachtas inquiries.

Chapter 5 Footnotes21. On 2 April 2015, pursuant to Dáil Standing Order 94C and Seanad Standing Order 82C, the Joint Committee agreed that it was necessary to proceed with witness evidence and Mr John Moran consented to having his evidence heard by the Joint Committee in the absence of Senator Susan O’Keeffe. The Joint Committee also agreed that as the Senator’s absence was due to exceptional circumstances, Dáil Standing Order 94B and Seanad Standing Order 82B (removal of a member) did not apply.22. Dáil Standing Order adopted on 107J adopted on 5 March 2015 | Seanad Standing Order 103O adopted on 11 March 2015.23. See Chapter 6 for general comments on the conduct of the Nexus Phase investigation and alternative investigation models.24. Central Bank (Amendment) Act 2015 was enacted on 4 February 2015. Standing Orders setting out sanctions for non-compliance with provisions of the Act were adopted by both Houses on 10 February 2015, clearing the way for material to be provided to the inquiry.25. “in summary or aggregate form, such that individual credit institutions cannot be identified, without prejudice to cases covered by criminal law” [per Directive 2013/36/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 26 June 2013].26. Section 71(1)(c) ). See also the related restriction in s.71(1)(e) which provides that a Joint Committee cannot direct evidence or documents where they could reasonably be expected to prejudice: “(i) the prevention, detection or investigation of offences, (ii) the apprehension or prosecution of offenders, or (iii) the effectiveness of lawful methods, systems, plans or procedures employed for the purposes of the prevention, detection or investigation of offences or the apprehension or prosecution of offenders.”27. Section 95. For other examples of where the DPP has a statutory role in respect of the inquiry processes, see s.72 and s.10028. Section 35, 38 and 39